Mortgage rates have crept higher from the beginning of the week. In my ‘rate update’ on Monday we shifted to a locking bias in the near-term so hopefully this did not keep readers of this blog off guard.
Mortgage rates have risen slightly mainly due to technical trading patterns. The fundamental outlook for the global economy is still concerning which is why I expect mortgage rates to remain at or near all-time low levels until a credible plan is proposed in Europe to shore up the region’s financial system.
Yesterday, The European Central Bank (ECB) left its key short-term interest rate unchanged and ECB President Mario Draghi assured the markets that they stand ready to support the financial system. However, significant challenges remain and until Germany signs on to a bold plan I don;t expect any changes to the prospects there.
Earlier today the Chinese government eased its key interest rates in a move to bolster economic growth. The move is seen as an acknowledgement of the negative impact of the European debt crisis on sovereign nations.
The outlook for the US economy has also dimmed. In testimony in front of congress earlier today Fed Chairman Ben Bernanke acknowledged that substantial risks face the economic recovery but he stopped short of committing to another round of quantitative easing. Interest rates are already at all-time low levels so I’m personally unclear why another round is needed.
Current Outlook: floating